Value added tax occupies an important place in budget revenues, therefore it is constantly under the scrutiny of tax authorities. Aerobatics for a chief accountant is the ability to correctly calculate and optimize this tax.
More about input VAT
Input VAT is VAT that is paid to a supplier when paying for goods or services. When concluding an agreement, as a rule, the question immediately arises whether the counterparty works with VAT or not. It is more profitable for firms that themselves are on a common taxation system to work with the same suppliers, since the input VAT can be deducted from the amount of tax due to be paid to the budget. Input VAT is charged by the supplier to the buyer in addition to the cost of goods or services. Organizations and individual entrepreneurs that operate without VAT tend to have a lower price for similar goods and services.
For tax purposes, input VAT can be used as follows:
1. Accept refunds. At the end of the reporting period (one quarter), the tax billed to customers for this period (shipment) is taken, and VAT that has already been paid or taken into account from suppliers is deducted from it. The difference is paid to the budget. If the input VAT turns out to be more than the output VAT, then it can be returned from the budget.
2. To take into account in the cost of goods or services (regulated by clause 2, article 170 of the Tax Code of the Russian Federation).
3. Include in costs that reduce income tax. (regulated by clause 5, article 170 of the Tax Code of the Russian Federation).
Documentary evidence of input VAT
The document that confirms the input VAT is an invoice. This document must be addressed specifically to the buyer; for this, the correct name and all the details must be indicated in the "Buyer" line. An invoice is the first thing that is requested during a tax audit, so the document must be perfect. There are various guidelines on how to properly issue an invoice. Unfilled fields or sections with errors, typos are not allowed. Such a document will not pass verification and the amount of VAT will not be credited, and this will lead to high fines and arrears. Criminal liability of officials is possible for VAT fraud.
When applying the simplified taxation system, the VAT paid to the supplier can be written off as expenses if there are supporting documents.
VAT reporting
Value added tax must be reported. The declaration is submitted once a quarter - until the 20th day of the month following the quarter. From January 1, 2014, this document can be sent to the tax office only in electronic form. In the same period, it is necessary to calculate and pay the advance payment for VAT.
